I’ve been doing some thinking about the high speed 3D printing revolution, and realized there’s going to be another casualty: resellers.
What’s this all about? I wrote a long piece about the changes underway here, but basically this is what’s happened:
- Inexpensive desktop equipment has lowered in price to bottom levels around US$200 per unit
- Desktop machine capabilities are beginning to rival professional equipment functionality
- Many desktop and professional 3D printer manufacturers are likely to fail in the next few years as a shift to inexpensive equipment takes place
That all seems pretty clear at this point, but I now believe there will be another casualty: resellers.
Resellers are regional operations that make deals with different manufacturers to distribute and support their products. So, for example, if a manufacturer in the Netherlands wants to sell equipment in California, they have two choices:
Somehow set up their own sales operation in California at great expense, and start with zero contacts and little knowledge of the local sales practices, or:
Ship equipment to a reseller and have them do it all for you.
This is a very common practice for professional 3D printing equipment, but far less so for inexpensive desktop equipment. The latter is today more of a consumer-style buying approach, with only a few resellers providing support.
Wait, who needs that support? Most desktop operators don’t need support, they just fix it themselves, review forum posts and share knowledge on their own.
That’s not the case with professional 3D printers, where the machines are used for business purposes. There is no time for people to fiddle around with machines as they have other responsibilities. To address that need resellers typically offer service and support programs of some sort. That allows a business to buy a machine and not worry too much about keeping it going. They can focus on whatever their actual business might be.
Resellers make money because the underlying cost of the equipment is relatively high: they can squeeze in some margin to make a go of it. It’s quite different than the consumer-oriented race to the bottom, where the price is everything. Buy those cheaper machines and that’s about all you get.
Now let’s apply the “professional shift” I’ve been predicting to this scenario. Whereas a business might have purchased a US$5-10,000 machine from a reseller with an annual maintenance contract of US$2,000, they now have other options.
They could buy a US$500 machine to get the same functionality. And I think they will. You would too, if you’re responsible for the department’s budget.
That leaves the professional 3D printer manufacturers in a bind, because their machine AND entire ecosystem is set up for higher costs. The whole thing may collapse if they lose too many sales.
If the 3D printer manufacturer is a casualty, then so too are their resellers. They won’t be getting that US$1500 markup on the US$10,000 3D printer anymore, nor the US$2,000 annual maintenance contract.
I have a feeling we may see some professional 3D print resellers in deep trouble soon. What can they do? I suppose they could diversify and take on related products that aren’t subject to price collapse, and that may work for them.
But hold on a minute, who does the service for those new inexpensive machines?
The usual prices for maintenance contracts will be way too high for new buyers of inexpensive equipment. The maintenance would pay for several replacement units, so why not just buy them instead of having a maintenance contract?
Resellers might try putting together a simplified service contract at far lower cost and hope to pick up enough work from professional business operations to fill the gap. But they’d need a lot more customers than they have now.
On the other hand, the service offerings from inexpensive 3D printer manufacturers are pretty terrible at the moment. It may be that they contract with resellers to perform service in different regions, so the resellers’ customers might be the manufacturers instead of the machine buyers.
That could be the most likely outcome, as it would be in the interest of machine makers to provide proper service in all regions. That can only be done by resellers who know the area and practices — and who have the trust of their customer networks.
But that’s all just a theory. Reality will be different.
What do you think?